You may recall that on 12 August 2013 my colleagues, Annegret Mueller-Mundt and Nicola Pamler, explained some basics about temporary workers in Germany. Coming back to this topic, please be aware of a recent interesting and important decision of the German Federal Labour Court. The court had to decide on the question of whether an employment between the employee and the hiring company (Entleiher) is created by law if the assignment is not “limited in time”. To understand the decision, please let me outline the most important facts about temporary workers for you:
- Three parties: The employee is employed by the employee hiring agency (Verleiher) and works for the hiring company. There is no employment contract between the employee and the hiring company.
- Authorisation: The employee hiring agency needs a special authorisation to be allowed to provide a hiring company with an employee. If it nevertheless provides employees to a hiring company without authorisation, the law states that an employment between the hiring company and the employee is created – this is the case even though none of the parties ever agreed on an employment contract. Such an outcome is rather uncommon under German law.
- Limited period of time: The employee may only be assigned to the hiring company for a limited period of time. The courts have not yet decided what “a limited period of time” means so there is some uncertainty in this regard. Furthermore, hiring companies could not be sure, whether the courts would implement the same consequences as in case of a missing authorisation if it found that the parties exceeded “a limited period of time”.
However, the Federal Labour Court has now decided that irrespective of the question as to whether the parties exceeded a “limited period of time”, an employment is not created by law between the hiring company and the employee provided that the hiring agency obtained the required authorisation.
This as a positive result because – in this case – it takes away the risk of the hiring company creating an employment relationship with the employee without the intention to do so. However, we are still awaiting a definition of “a limited period of time” from the courts and a decision regarding the consequences if the (undefined) thresholds are not met. Perhaps politics will provide some clarification soon, as according to the new governmental program a clear threshold is due to be implemented. However, until then, companies should be aware of the unsolved issues regarding temporary workers in Germany.